Preemption (law)
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- This article is about the power of federal law in the United States. For the ability of a computer operating system, please see Preemption (computing).
In the legal system of the United States, preemption generally refers to the displacing effect that federal law will have on a conflicting or inconsistent state law. The Supremacy Clause (Article VI, section 2) of the United States Constitution states that The Laws of the United States, (which shall be made in Pursuance to the Constitution), shall be the supreme Law of the land. Thus, when there is a conflict between a state law and federal law, the federal law (subject to the Tenth Amendment and Fifth Amendment and other Constitutional Law) trumps – or "preempts" – the state law. The term is also sometimes used to refer to the displacing effect state laws might have on ordinances enacted by municipalities.
The term "preemption" is also used in federal statutes in the context of land, such as in the historic Preemption Act of 1841, which allowed settlers the opportunity to legally obtain title to land if a settler remained on a plot of land for a certain time. This article does not cover that legal use of the term.
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[edit] Types of preemption
Two situations where preemption claims might arise: express preemption and implied preemption.
- Express preemption occurs where Congress says within the statute 'we hereby preempt.' Here, federal laws are explicitly precluding state and local regulations.
- Implied preemption has, within itself, three sub-categories: conflicts preemption, preemption because state law impedes the achievement of a federal objective, and preemption because federal law occupies the field.
- Conflicts preemption is where it is impossible to comply with both the federal statute and the state or local law. In this situation, the federal statute must be followed. It is, however, appropriate to have two laws, one federal and one state, that differ. The federal law, in this case, may be a minimum standard, while the state enacts a law to be more strict. State law, therefore, would not be preempted. Preemption would only occur if the federal and state laws were mutually exclusive.
- The second type of implied preemption is preemption because state law impedes the achievement of a federal objective. This type of preemption occurs when a state or local law interferes with a goal or objective Congress was trying to attain with a federal statute. The purpose of each law must be determined and compared to each other. If both laws are trying to achieve the same goal, federal law will preempt the state or local regulation.
- The final type of implied preemption is preemption because federal law occupies the field. In this situation, one must look at Congress's intent, and whether the federal law was meant to be exclusive in that area. The most common examples are in areas of foreign policy and immigration for the better of human kind. Implied preemption has also been held to apply to the Labor Management Relations Act (LMRA), giving the federal government the exclusive jurisdiction to resolve Labor Union versus Employer contract disputes, as well as the Employee Retirement Income Security Act (ERISA), giving the federal government exclusive jurisdiction (with minor exceptions) over enforcement of the substantive provisions of employer-sponsored Welfare and Pension Benefit Plans (Cigna v. Calad, 2004).
[edit] Case law
Courts have developed an enormous and complicated body of case law to resolve conflicts between federal and state laws. As a general rule, there is a presumption in favor of the validity of a state law; thus, courts will attempt to reconcile seemingly inconsistent state and federal laws where possible. If the laws are truly irreconcilable, then the federal law will generally preempt the state law only to the extent of the inconsistency. There are many exceptions to these general rules, however. For example, Congress may declare its intent to make the federal government the primary source of law in a particular area, which will result in state laws regulating that area being preempted even if they are not inconsistent with the federal law. Even in the absence of any indication that Congress intended to "occupy the field" of a particular subject matter, courts will be more likely to find a state law to be preempted by federal law if it touches upon an area where there has historically been a strong federal interest, such as banking, interstate commerce, or foreign affairs.
Examples of Supreme Court cases involving the preemption doctrine include Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132 (1963), Gade v. National Solid Wastes Mgt. Ass'n, 505 U.S. 88 (1992); Crosby v. National Foreign Trade Council, 530 U.S. 363 (2000); and Egelhoff v. Egelhoff, 532 U.S. 141 (2001)
[edit] Preemption of State law by ERISA, affecting Managed Care "Malpractice"
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The Supreme Court has decided that ERISA (Employee Retirement Income Security Act of 1974) has taken the entire field of employee benefit regulation. Thus any suit by a plan participant for denial of coverage in the form of a medical malpractice or other state law tort is subject to the defendant removing it as a federal ERISA claim and having ERISA preemption void their claim. see Mass Mutual v. Russell, Mertens v. Hewitt Associates, Great-West v. Knudson.
In a highly-publicized landmark case, "Cigna HealthCare of Texas, Inc. v. Calad et al.," together with "Aetna Health Inc. v. Davila," the Supreme Court ruled in 2004 that the Respondents' state Causes of Action, (both involving Utilization review decisions by Managed Care entities that were alleged to adversely affect patient care, where in both cases Utilization review decisions contradicted the advice of the Respondents' personal physicians), fell within ERISA 502(a)(1)(B), and were therefore completely pre-empted by ERISA $502 and removable to Federal Court, therefore giving this court Jurisdiction over resolution of the complaints.
The effective result of this decision was that the "Texas Healthcare Liability Act" (THCLA) that held Utilization review decisions by Managed Care entities to a legal Duty of care according to the laws of Medical practice in that state, could not be enforced in the case of Health Benefit plans provided through private employers, because the Texas statute allowed compensatory or punitive Damages, which were not available under ERISA $502. The ruling still allows Texas to enforce the THCLA in the case of government-sponsored, church-sponsored, or individual health plan policies, which are saved from preemption by ERISA.
The ruling was informed largely by ERISA judicial Precedent (Judge-made, or Common law), as established early in ERISA's judicial history, especially "Pilot Life v. Dedeaux," 1987. In this case, the language of ERISA and other evidence of congressional intent, including ERISA's legislative history; the expansive interpretation of ERISA's preemption clause (i.e. ERISA supersedes state laws that "relate to" private employer-sponsored benefit plans, with no specific guidance in the wording of the clause as to how Congress intended "relate to" to be interpreted); coupled with ERISA's enforcement scheme, which includes Equitable Remedies but not Legal Remedies, led to the conclusion that state law Causes of action for legal remedies under Mississippi common law for Bad faith denial of insurance claims, including compensatory and punitive damages, were not allowed by ERISA. As this case challenged a disability insurance claim denial, the equitable remedies that are provided by ERISA might still have been available to Mr. Dedeaux despite this ruling, as ERISA provides several equitable njunctive remedies to challenge denials of benefit claims.
The biggest distinguishing factor from "Pilot Life" in the case of "Cigna v. Calad" was the fact that it was too late for ERISA's powerful injunctive remedies to benefit the Respondents, who had already suffered damages for which equitable relief could not compensate them for their loss or suffering.
Essentially, this Supreme Court decision placed the Respondents' state law Complaints in the status known as "Failure to state a claim upon which relief could be granted" and had to be Dismissed on their faces. The facts of the case were never elucidated either by Discovery or Trial, but the cases were Dismissed by Motion, as a matter of law, whereby even examining the facts in the most favorable light in favor of the Respondents, the relief they were seeking could not be granted. As an example, if the Utilization review nurse had negligently applied the discharge protocol for Hemorrhoidectomy rather than Total Abdominal Hysterectomy, and if Calad had died from Complications resulting from the treatment decision to treat her on an outpatient basis with discharge instructions after only 1 day of hospitilization, the case would still have had to be dismissed; the law does not recognize monitary Damages for negligent actions in Managed Care "administration" of Employer Medical Benefit Plans but does acknowledge that state Malpractice laws do apply to treating physicians deciding or administrating the course of a patient's care (see Pegram v. Herdrich).
Cigna and Aetna both pointed out in oral arguments what has been referred to in ERISA's judicial history as the "Panoply" of remedies that Calad and Davila might have evoked under ERISA, to include appeals, judicial Injunction to compel Utilization Review to approve treatment, and a new Texas law that allowed for independent arbitration over Managed Care Utilization Review decisions based on Medical necessity. Under the concepts of Torts under Anglo-American common law (which do not inform the current interpretations of ERISA), this might best be described as a defense of contributory negligence.
Perhaps future decisional law modeled after the Supreme Court's 1966 Ruling in "Miranda v. Arizona" might inform future laws to ensure that patients not simply "have" legal rights under ERISA to challenge Managed Care Utilization review decisions, but to put the burden on the Managed Care entities to make sure patients are aware of them and have the opportunity to invoke them before life, safety, or health-threatening medical treatment choices governed by Utilization review can cause irreparable damage or death for which ERISA provides no Remedy. Such law might be guided by the wording of the statute, that a patient must be "afforded" the opportunity for full and fair review of benefit claim denial or adverse Utilization review decisions. As in "Miranda," which involves a similar Fifth Amendment Constitutional question of being deprived of Life, Liberty, or Property without Due process of law (Lochner v. New York), "affording the opportunity" for appeal might be enforced not only by the existence of a such statutory rights but by ensuring that the patients are informed of those rights and are given the reasonable opportunity to invoke them.
The ERISA claims procedure laws detailed by the Secretary of Labor (29 CFR 2560.503-1) require written notice for any "Adverse Determination" such as a Utilization review decision not to extend an approved course of treatment, and must provide a reasonable opportunity for a claimant or a representative (in Calad's case, her treating physician) an opportunity to appeal the decision in a timeframe appropriate to the urgency of the situation -- in Calad's case, prior to her discharge. These regulations also require that the claims procedure not "contain any provision, and are not administered in a way, that unduly inhibits or hampers the initiation or processing of claims for benefits; a provision or practice that requires payment of a fee or costs as a condition to making a claim or to appealing an adverse benefit determination would be considered to unduly inhibit the initiation and processing of claims for benefits." For example, requiring a patient to agree to pay for a potentially costly medical treatment up front out of pocket in order to preserve the right to challenge the adverse determination later in court, with no guarantee that the challenge would be successful, and with a high risk of incurring expensive legal costs as well, would be considered "hampering the initiation or processing of claims for benefits," for obvious reasons.
Unfortunately, the claims procedure laws are seldom followed, in part because the only recourse set forth by these laws for failure to provide such an appeal process is the right for the patient to consider the appeals process to be exhausted and bring a Civil action under ERISA. Such an action might in theory be applied for patients like Calad if the patient had a lawyer prepared to file an emergency ex parte Motion for a Temporary restraining order in US District Court, perhaps even by phone to a Magistrate, to compel the Utilization review nurse to approve treatment to protect the patient from imminent danger to life or health that might occur from discharging the patient against medical advice.
As lower Courts are bound by the Precedents of higher Courts, as is the Supreme Court bound in large part to its own precedents, there has been great frustrations by the Courts in lawsuits brought by Plaintiffs who under state common law would be entitled to monetary relief for damages or death suffered as a result of Utilization review nurses breaching a Duty of care or the laws of the practice of Medicine by prescribing the treatment plan for a Diagnosis, as in Calad's case, as complex as "status post total abdominal hysterectomy with vaginal and bowel repair," presumptively, before the surgery is even performed, as 1 day of inpatient care with 8 weeks of outpatient care, on the basis of a discharge protocol to be followed that hinges not on the Clinical judgment of the physician who performed the surgery but the single question, "were there any Complications of the procedure?"
This frustration was well stated by Justice Becker of the US Court of Appeals for the Third Circuit in his concurring opinion in Defelice v. Aetna, et al., a frustration succinctly summarized in Justice Becker's quote from a previous decision in "Andrews-Clarke v. Travelers Ins. Co.," (a Complaint by a widow for the death of her husband as a consequence of a Managed Care Utilization review decision that cut short her husband's physician's recommended in-hospital treatment plan) as follows:
"Under traditional notions of justice, the harms alleged — if true — should entitle [plaintiff] to some legal remedy on behalf of herself and her children against Travelers and Greenspring. Consider just one of her claims — breach of contract. This cause of action — that contractual promises can be enforced in the courts — pre-dates Magna Carta. It is the very bedrock of our notion of individual autonomy and property rights. It was among the first precepts of the common law to be recognized in the courts of the Commonwealth and has been zealously guarded by the state judiciary from that day to this. Our entire capitalist structure depends on it.
"Nevertheless, this Court had no choice but to pluck [plaintiff ’s] case out of the state court in which she sought redress (and where relief to other litigants is available) and then, at the behest of Travelers and Greenspring, to slam the courthouse doors in her face and leave her without any remedy."
Also, Supreme Court Justice Ginsburg, in her concurring opinion in Cigna v. Calad, in which Justice Breyer joined, expressed the sentiments held by many that either Congress or the Supreme Court revisit the law as currently enforced by statute and precedent:
"The Court today holds that the claims respondents asserted under Texas law are totally preempted by §502(a) of the Employee Retirement Income Security Act of 1974 (ERISA or Act), 29 U. S. C. §1132(a). That decision is consistent with our governing case law on ERISA's preemptive scope. I therefore join the Court's opinion. But, with greater enthusiasm, as indicated by my dissenting opinion in Great-West Life & Annuity Ins. Co. v. Knudson, 534 U. S. 204 (2002), I also join "the rising judicial chorus urging that Congress and [this] Court revisit what is an unjust and increasingly tangled ERISA regime." DiFelice v. AETNA U. S. Healthcare, 346 F. 3d 442, 453 (CA3 2003) (Becker, J., concurring)."
Cigna stated in their Brief for Petitioner a position shared by many advocates of Universal health care, namely, that by rationing Health Care Plan monitary expenditures by Managed Care entities such as Aetna and Cigna (through Utilization review), the monitary expenditure (funded through taxes or private employer compensation/benefit packages and employee payroll deductions) for Health Benefit Plans will also be reduced, providing greater health care access to more Americans: "Employers, of course, do not have unlimited funds to pay for employee health benefits. As health benefit costs inevitably increase, employers will inevitably provide fewer benefits to fewer employees. The necessary result will be more Americans without any health care coverage at all -- a guaranteed prescription for lower quality overall care."
[edit] External link
Barry Yeoman, The Real State Takeover, The Nation
